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October 17, 2013

Not long from now, cars will start talking to other cars. Wearable technology will put the Internet on your body. Phones won't just be for interacting with the Web anymore; they'll also start to respond to other inanimate objects around them. All of this stuff depends on radio signals moving back and forth between devices. Problem is, with so many of these transmissions crowding the airwaves, a lot of them could get lost to interference.

To fix the coming crunch, federal regulators think they've come up with the right solution: Give companies like Verizon and AT&T a lot more frequencies on the wireless spectrum to play with. But where will all those extra channels come from? That's where the television industry comes in. If all goes according to plan, next year hundreds of TV stations will get a big check to shut down operations and give up their spectrum. Then the agency will turn around and sell that invisible treasure to the wireless companies so that when you fire up your data connection, you won't get caught in an online traffic jam. All told, the FCC hopes to take about 20 channels worth of spectrum that are currently licensed to various TV stations across the country and auction them off to the wireless companies in various local markets.

The TV stations are cagey about whether they intend to participate. A key industry group, the National Association of Broadcasters, is eyeing the auctions with a mix of uncertainty and optimism. But the whole plan can only work if enough broadcasters volunteer. So to help build support for it, a few dozen TV stations that strongly support the idea have banded together to promote it - anonymously. In principle, the deal benefits everybody. Broadcasters who are struggling to make ends meet can exit the industry with a nice chunk of change. Wireless companies get to use the newly freed-up spectrum. And some revenues from the auction will go toward funding new government projects like a dedicated nationwide first-responder network.

In practice, the politics have proven rather delicate. The more broadcasters choose to exit the industry, the less bargaining power the industry will have in future negotiations, said Scott Wallsten, a senior fellow at the Technology Policy Institute. "If you think about this from the view of the National Association of Broadcasters," Wallsten says, "then if the auction succeeds, they lose a good chunk of their membership."

That has set up a weird dynamic among TV stations; after all, some intend on staying in business even as others contemplate getting out. Muddying matters further, no TV station wants to telegraph its intentions for fear of exposing themselves to the local competition. So while 70-odd stations have joined so far to support the spectrum auction, none of the group's members has knowledge of the others' identities. Preston Padden, a former president of ABC, represents the anonymous alliance, known as the Expanding Opportunities for Broadcasters Coalition. "I can tell you it includes a broad range of stations," he says. "Some of them are broadcasters that I've known in my career for 30 years or more; some of them are newer entrants. We have a significant number of ethnic minority owners who are potentially interested in selling."

If the minority stations fold, however, it'll leave the TV industry just a little less diverse - a little less interesting, you could say. And it's not just foreign-language broadcasters that might exit - we're also talking about religious broadcasters, college- and family-owned stations or others that are among the least profitable in their markets. These niche stations could begin to disappear as they accept the buyout, too. What'll be left are the big network affiliates - your local ABC, CBS or NBC stations. "It's hard to imagine any major network affiliate participating in the auction," says Wallsten. "If they participate, they'll have among the highest bids because their business is worth the most." By contrast, the FCC would rather pay broadcasters who will accept a lower price for their spectrum.

Getting out of the industry completely isn't the only option. FCC Commissioner Jessica Rosenworcel says the auction should give station operators an incentive to move frequencies and share their channel with other stations. Consumers might wind up watching one station for a certain part of the day, and another station for the rest of the day on the same channel, but it would help open up more spectrum cheaply. However the auction unfolds, it's almost certain to mean a more limited TV landscape. Still, the National Association of Broadcasters isn't about to oppose the plan. "We want this to be a successful auction," says Dennis Wharton, an NAB spokesperson. "The last thing we want as the NAB is to be back at this in three or four years and have the wireless folks claim that, 'Well, we tried a voluntary approach - now let's force them to give up the airwaves.'" Washington Post